Joseph LiBassi, left, chairman of Staten Island's Victory State Bank, and Ralph Branca, CEO and president of the bank, stand on the podium of the NASDAQ MarketSite in Manhattan on Nov. 23 as they prepare to ring the closing bell.

STATEN ISLAND, N.Y. -- As its largest current shareholder, the original president of Victory State Bank is faulting the present management and board of directors over their financial leadership.

Merton Corn said he believes the Staten Island-based commercial bank, with more than $27 million in equity and five local branches, has faltered at the hands of President and CEO Ralph Branca and Chairman Joseph LiBassi.

Corn owns a 9 percent stake in VSB Bancorp Inc., which is the holding company for the largest bank by market capitalization on the NASDAQ stock exchange.

In a statement issued to the Advance, Corn said the bank's earnings have declined in each of the past five years, and that earnings in banks the size of Victory have improved in each of the last three years.

"Victory's non-performing loans as a percent of assets or as a percent of loans are higher than 95 percent of banks our size," asserted Corn.

He said he made his complaints known at the Victory State Bank shareholders meeting on April 23.

It was reported on Wall Street this week that in the month of April shares of VSBN fell 4 percent, to $10.03.

According to www.BuySellSignals.com, a financial website, the value on April 30 of $1,000 that was invested in VSB Bancorp two years ago had fallen to $835.

"Given the poor performance of the bank under the present management and board and the resultant poor performance of the stock price of Victory, it is appropriate to engage investment bank counsel to explore ways to maximize shareholder value," Corn stated to the Advance.

He called for "appropriate adjustments based on performance" difficulties to be made in reducing compensation for Victory State Bank's CEO, chairman and the board of directors.

In reply, Branca stated to the Advance on Wednesday:

"We have outperformed our peer group in profitability four of the last five years. While we can't control our stock price, we have increased shareholder book value by 40 percent in the last five years.

"We are a local community bank that serves many constituents, especially the businesses and residents of Staten Island. In the aftermath of Superstorm Sandy, we waived deposit service charges and late fees. We worked with our loan customers to provide them payment relief, when requested. We loaned money to businesses directly damaged by Sandy. We are here to support our community."

For his part, LiBassi stated:

"There are a lot of banks that look like they have improved a lot in the past few years, but that's only because they started out in such bad shape in 2007 and 2008. Our original stockholders [the bank was founded in 1997] own their stock at $4 per share, well below our current stock price.

"In fact, Ralph Branca and I own more combined shares than any other stockholder and we are deeply vested in the performance of the bank.... We have paid out 22 consecutive quarterly dividends during the toughest economic climate in the last 80 years."

Referring to the challenges faced by Victory State Bank, Branca said on March 12: "Our earnings have been constrained by the low-interest-rate environment and the weak demand for loans."

According to its website (www.victorystatebank.com): "The bank's results of operations are significantly affected by general economic and competitive conditions, particularly changes in market interest rates, government policies and actions of regulatory authorities."

On the website, in a message from the president. Branca says: "We have designed Victory to provide a high level of service to small business and professionals."

He adds: "Many banks trumpet their dedication to customer service but they are in reality sales- and profit-driven. When quality of customer service interferes with the bottom line at those banks it is service that is sacrificed. At Victory, we sacrifice income to offer better service in the belief that quality service will in the long run provide excellent profitability." ---Follow @siadvance on Twitter, join us on Facebook